SAIC grew revenue 6% in fiscal Q2 2027 but a 0.6 book-to-bill ratio signals a replenishment gap
Federal IT services contractors are navigating a contract-award cycle running behind revenue consumption, and Science Applications International Corporation (NASDAQ: SAIC) put a number on the gap this quarter. The company…
Key takeaways
- SAIC reported fiscal Q2 2027 revenue of $1.88 billion, up 6.3% year over year.
- The quarter's book-to-bill ratio was 0.6 on net bookings of about $1.2 billion, signaling awards are trailing revenue consumption.
- Backlog stood at approximately $22.1 billion, of which only $3.8 billion (roughly 17%) was funded.
- Non-GAAP adjusted diluted EPS fell 17% to $3.01, distorted by a $47 million prior-year tax benefit, while operating cash flow rose 20% to $146 million.
- SAIC raised fiscal 2027 revenue guidance to $7.2 billion–$7.3 billion, up from $7.0 billion–$7.2 billion.
Federal IT services contractors are navigating a contract-award cycle running behind revenue consumption, and Science Applications International Corporation (NASDAQ: SAIC) put a number on the gap this quarter. The company reported second-quarter fiscal 2027 revenue of $1.88 billion, up 6.3% year over year, while net bookings of approximately $1.2 billion produced a quarterly book-to-bill ratio of 0.6.
The backlog stood at approximately $22.1 billion at period end, down from $22.6 billion six months earlier. Of that total, only $3.8 billion was funded; the remaining $18.3 billion consisted of negotiated unfunded backlog, covering future revenue under contracts that have not received appropriations and unexercised priced options. Funded backlog represents roughly 17% of the total. The trailing 12-month book-to-bill ratio was 0.8, meaning SAIC booked approximately $0.80 of new work for every dollar of revenue recognized over that stretch. The arithmetic is clear: backlog shrinks unless awards accelerate.
Against the backdrop of that replenishment pressure, the revenue line held up. Non-GAAP organic growth came in at 5.3%, excluding acquisitions and divestitures. The SilverEdge acquisition added $20 million. Defense and Intelligence revenue increased 5%; Civilian revenue grew 9%. Management raised fiscal 2027 revenue guidance to $7.2 billion to $7.3 billion, up from $7.0 billion to $7.2 billion.
Earnings and the post-quarter DHS award
Operating cash flow rose 20% to $146 million from $122 million a year earlier, a result that contrasted with softer earnings. Non-GAAP adjusted diluted EPS fell 17% to $3.01, a comparison distorted by a $47 million tax benefit in the prior-year period from the settlement of a federal tax audit. Non-GAAP adjusted EBITDA rose 4% to $193 million, though the margin narrowed to 10.3% from 10.5%. Non-GAAP free cash flow declined 13% to $131 million.
A five-year, approximately $740 million award from the U.S. Department of Homeland Security arrived after the quarter closed. The task order covers operations and maintenance support for Customs and Border Protection systems and should improve the third-quarter bookings profile. It is a recompete, protecting existing program work rather than adding net new demand.
Insider Monkey's database showed 20 hedge funds holding SAIC at the end of the second quarter of 2026, down from 23 the quarter before. The recompete award should lift next quarter's bookings figure, but with the trailing book-to-bill at 0.8 and most of the backlog unfunded, the gap between award flow and revenue consumption has not closed.
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